Dec. 9 (Bloomberg) -- ING U.S. Inc. will begin selling
fixed annuities through Allstate Corp. agencies as the largest
publicly traded U.S. auto and home insurer ceases to offer its
own brand of the retirement products.

The deal gives ING U.S. access to one of the biggest
insurance customer bases in the country, while furthering a
strategy by Allstate Chief Executive Officer Tom Wilson to scale
back from a business that has proven less profitable amid low
interest rates. Terms weren’t disclosed in a statement today
announcing the agreement.

Wilson has refashioned his company’s life-insurance
division by winding down sales of retirement products and
focusing on Allstate-branded agencies. The Northbrook, Illinois-based insurer sold a variable-annuity business to Prudential
Financial Inc. in 2006 and, in July, said it would halt fixed-annuity sales at the end of this year. Allstate also agreed to
divest Lincoln Benefit Life Co., which provided life and
retirement products through independent agents.

The deal with ING U.S. is “the next step that will move us
toward what we’ve been trying to accomplish for the last several
years,” Don Civgin, CEO of the life division, said in a phone
interview before the announcement.

Allstate will still sell life policies through its
agencies. Returns on those products are “pretty good” and an
area that the insurer would like to expand, Civgin said.

Interest Rates

Operating return on equity for life insurance was 9 percent
last year compared with 6.5 percent for annuities and
institutional products, according to data on Allstate’s website.
Life insurers have faced pressure in recent years as near-record-low interest rates narrow the spread between what they
can earn on investments and guarantees made to clients.

“This interest-rate environment has made it challenging
for everybody, not just Allstate,” Civgin said. “Everyone’s
been struggling with how to run their businesses.”

ING U.S. is seeking to add clients as it distances itself
from Amsterdam-based parent ING Groep NV. The U.S. business,
which will be renamed Voya Financial, had an initial public
offering in May that raised more than $1 billion. The Dutch
company is winding down its ownership to comply with terms of a
2008 government rescue.

“Working with Allstate will help expand our growing
footprint in the fixed-annuity marketplace,” Chad Tope,
president of annuity and asset sales at New York-based ING U.S.,
said in the statement. Allstate had about 11,200 exclusive
agencies and financial representatives in the U.S. and Canada as
of Dec. 31, according to the insurer’s website.

Sales Improving

Sales of the retirement products have been recovering this
year as rising interest rates make the products more appealing
to clients. Customers purchased $58 billion of individual fixed
annuities in the first nine months of 2013, compared with $54.6
billion in the same period last year, according to industry
group Limra.

Allstate, once among the largest providers of the products,
has scaled back in recent years, reducing the channels it sells
through. The company collected $786 million in fixed-annuity
deposits in the first nine months of this year, according to
data on its website. ING U.S. had about $1 billion of fixed
annuity deposits in the first three quarters of this year,
according to the insurer’s website.

Fixed annuities generally guarantee customers a stream of
payments over time. Some of the products ensure that a client’s
initial deposit will increase in value.

Allstate lost 0.4 percent to $54.11 at 4:15 p.m. in New
York and has risen 35 percent this year. ING U.S. climbed 0.8
percent to $35.03. The insurer has surged 80 percent from its
IPO price.